SB 372: Department of Banking and Finance; removal of references to reputational risk from any Department of Banking and Finance guidance, rule, examination manual, or similar document; provide

Currently, Georgia's Department of Banking and Finance can consider a financial institution's reputational risk, meaning the chance that bad publicity or public opinion could hurt its business, when writing rules, conducting exams, or taking enforcement action. This bill would end that practice. The bill creates a new Code section (O.C.G.A. § 7-1-80) that defines reputational risk and requires the department to remove all references to it from its guidance, rules, examination manuals, and similar documents. It also lists specific supervisory activities, including rulemaking, examinations, supervisory ratings, and enforcement actions, where the department could no longer weigh reputational risk. The department would have to report to the General Assembly by January 1, 2026 describing any internal policy changes made because of the law. The bill also updates a related definitions section (O.C.G.A. § 7-1-4) to reference the new Code section.

• Creates a new Georgia law (O.C.G.A. § 7-1-80) banning the Department of Banking and Finance from considering "reputational risk" when regulating financial institutions.
• Requires the department to delete any reference to reputational risk from its existing guidance, rules, examination manuals, or similar documents.
• Bars the department from using reputational risk in rulemaking, examinations, supervisory ratings, findings, or enforcement actions against financial institutions.
• Defines "reputational risk" as the potential for negative publicity or public opinion to hurt a financial institution's business, customer base, or revenue.
• Requires the department to submit a report to the General Assembly by January 1, 2026 describing any internal policy changes made because of the new law.
• Updates the definitions section of Georgia's banking code (O.C.G.A. § 7-1-4) to add a cross-reference to the new reputational risk restriction.

The Georgia Department of Banking and Finance, which loses a supervisory tool; banks, savings and loan associations, credit unions, and other financial institutions the department regulates; and members of the General Assembly, who would receive the department's required 2026 report.

Financial institutions could no longer be examined, criticized, or penalized by state regulators based on concerns about their public reputation, only on other regulatory factors. This changes how the department writes rules and conducts oversight, and could affect institutions previously flagged for reputational concerns tied to certain business practices or customers.

• Section 1 revises O.C.G.A. § 7-1-4 to add a cross-reference to the new Code Section 7-1-80 within the list of provisions applying to national banks, savings and loans, and federal credit unions.
• Section 2 creates new O.C.G.A. § 7-1-80, defining reputational risk in subsection (a) as harm to public confidence, customer base, litigation costs, or revenue.
• Subsection (b) requires the department to purge reputational risk references from all its guidance, rules, and examination manuals.
• Subsection (c) lists five specific supervisory activities, rulemaking, examinations, findings, ratings, and enforcement, where reputational risk cannot be a factor.
• Subsection (d) requires a report to the General Assembly by January 1, 2026 on policy changes made under this section.
• Section 3 repeals any conflicting laws.

1. 2025-04-02Senate Read and Referred (Senate)
2. 2025-04-02Senate Hopper (Senate)

• Larry Walker, III (R, SD-20)Primary sponsor
• John F. Kennedy (R, SD-18)
• Carden Summers (R, SD-13)
• Mike Hodges (R, SD-3)
• Russ Goodman (R, SD-8)
• Max Burns (R, SD-23)

• banking regulation
• financial institutions
• Department of Banking and Finance
• reputational risk
• state financial oversight